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On Monday, BofA Securities analysts reiterated their Buy rating and $14.00 price target for Warner Brothers Discovery (NASDAQ: NASDAQ:WBD) stock, currently trading at $9.97. According to InvestingPro data, analyst targets range from $9 to $24, suggesting significant upside potential. The analysts noted that since the merger was finalized in early 2022, Warner Brothers Discovery shares have not met expectations and have underperformed the broader market, though the stock has shown strong momentum with a 21% return over the past year.
The analysts highlighted that despite some financial assumptions not materializing as anticipated, they remain confident in the company’s unique and valuable assets. They suggested that exploring strategic alternatives, such as a potential spin-off of its Studios and Streaming segments, could unlock significant unrecognized value. With annual revenue of $38.34 billion and a market capitalization of $24.67 billion, WBD maintains its position as a prominent player in the entertainment industry. Discover more detailed financial metrics and 12 additional exclusive insights with InvestingPro.
In recent months, several developments have been identified by the analysts as steps towards realizing this potential. The company has completed a strategic reorganization into two segments, which is seen as a move towards greater strategic flexibility.
Additionally, the analysts pointed out that the S&P Ratings downgrade of Warner Brothers Discovery’s debt to high yield is another factor contributing to the company’s strategic flexibility. Despite the challenges, the analysts maintain a positive outlook on the company’s future potential.
In other recent news, Warner Bros. Discovery reported first-quarter 2025 earnings, revealing an earnings per share of -$0.18, which missed the forecasted -$0.13. The company’s revenue also fell short of expectations, coming in at $8.98 billion compared to the anticipated $9.59 billion. Despite these misses, Warner Bros. Discovery added over 5 million subscribers in the first quarter, signaling strong growth in its streaming platform. Additionally, the company plans to rebrand its primary streaming platform, Max, back to HBO Max this summer, aiming to leverage the HBO brand’s reputation for quality content. S&P Global Ratings recently downgraded Warner Bros. Discovery’s credit rating to ’BB+’ due to weakening credit metrics and ongoing revenue declines in its linear TV operations. Meanwhile, Raymond (NSE:RYMD) James adjusted its financial outlook for the company, reducing the price target from $13.00 to $12.00 but maintaining an Outperform rating. The analyst at Raymond James noted a stronger-than-expected adjusted EBITDA but a shortfall in revenue, with expectations for a rebound in the Studios segment driven by upcoming releases. Despite challenges, Warner Bros. Discovery continues to focus on strategic investments and subscriber growth, aiming for significant EBITDA growth in its streaming segment by 2025.
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